The Dollar has recently faced significant downward pressure, with President Trump expressing indifference to its decline, stating, "The dollar’s doing great." Brown Brothers Harriman (BBH) analysts note that the USD has undershot levels implied by rate differentials, with various structural drags continuing to weigh on the currency. The Federal Reserve is expected to maintain its current policy rate, while the market anticipates potential interventions that could further weaken the Dollar.

Dollar under pressure amid structural challenges

"President Donald Trump said he’s not concerned about the currency’s drop, adding “The dollar’s doing great.” The comments are not surprising, as a weaker dollar fits squarely with the Trump administration’s drive to revitalize American manufacturing activity."

"USD has firmly undershot the level implied by rate differentials. However, structural drags on USD - fading confidence in US trade and security policy, politicization of the Fed, and worsening US fiscal credibility – can continue to outweigh the more neutral cyclical USD backdrop and pull USD lower."

"FOMC policy rate decision is today (7:00pm London, 2:00pm New York). The FOMC is widely expected to keep the target range for the Fed funds rate unchanged at 3.50-3.75%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)